BetaFish

“Product/market fit has always been a fairly abstract...

Mon, 22 Nov 2010 12:00:00 -0500

“Product/market fit has always been a fairly abstract concept making it difficult to know when you have actually achieved it.

I’ve tried to make the concept less abstract by offering a specific metric for determining product/market fit. I ask existing users of a product how they would feel if they could no longer use the product. In my experience, achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product. Admittedly this threshold is a bit arbitrary, but I defined it after comparing results across nearly 100 startups. Those that struggle for traction are always under 40%, while most that gain strong traction exceed 40%. Of course progressing beyond “early traction” requires that these users represent a large enough target market to build an interesting business.

Once you have achieved product/market fit, it’s time to accelerate through the next steps of the pyramid and then begin scaling your business. Here’s a brief description of what to do at each of the steps before scaling:

Promise: Highlight the benefits described by your “must have” users (those that say they would be very disappointed without your product).
Economics: Implement the business model that allows you to profitably acquire the most users.
Optimize: Streamline a repeatable, scalable customer acquisition process by testing multiple approaches and tracking to improve the right metrics.

Effectively executing these pre-scale steps often improves the conversion rate to transactions by 5X or more. This directly boosts the effectiveness of every future marketing initiative by the same proportion. Just don’t rush into this fine-tuning phase until you have first achieved product/market fit.”

[this is a repost from Sean Ellis’s “Startup Marketing Blog”]

The Pilot Report: 12 Mile Radius

Mon, 22 Nov 2010 11:52:16 -0500

The Pilot Report: 12 Mile Radius:

The Pilot Report is a blog series which details some of the stuff our pilot companies have been working on. This week our post is from the 12 Mile Radius blog. Click here or the title of this post to visit the 12 Mile Radius website.

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Many mobile game these days are heading towards the freemium model of purchasing. According to one article (see it here) almost 40% of the top 100 games on the app stores are freemium model. So why the trend? It seems that Freemium model games get more profit, as it lures someone in with a free game and then offers enticing rewards for only a dollar or two. And then it’s a steep descent into pumping a lot more money into the game. Check the example of Stardunk, a game by Godzilab. They now have over 1.7 million downloads of their game and are netting much bigger profits than when the game followed the premium model.So how do the companies make more money this way? Seemingly people would be more willing to pay a one-time fee of 1$ and then have unlimited access to content rather than having a free game with restricted content for which you have to pay.

They make money from two different ways: outliers and the “lost investment” phenomenon. Outliers just refer to those people who will spend hundreds of dollars on a game merely because they have nothing else to do with it. If you think about it, one person spending $1,000 is the same as 1,000 people spending $1. So when the business analytics get released, these things don’t get mentioned.

The “lost investment” phenomenon is the idea that people don’t like to lose something that they’ve spent so much time on. For example, people will continue to play a game such as Farmville, even if they no longer find it enjoyable, merely because they don’t want to lose all of the things they’ve grown and everything they’ve worked so hard to achieve when they stop playing.This applies to the freemium model in that it requires a continuous amount of revenue to maintain the game in the way they want. Most games you can’t really get away with one-time purchases if you wish to have the best. You have to keep pouring money in, and once you’ve already done it once or twice, you don’t want to stop.

So is it a good business model? Only if done correctly. As it says in the Godzilab article mentioned above, you have to go about it the right way, and many games don’t lend themselves to that correct manner of freemium model.

We at 12 Mile Radius, however, think that the freemium model will not lend itself to the games we are trying to make. Additionally, the freemium model doesn’t work with the games that we want seen in the market. Next week we’ll have an article explaining this more and explaining our view on the market of mobile phone games.

12 Ways To Add Design Thinking Into Your Project - Tom Hulme

Wed, 27 Oct 2010 08:13:08 -0400

12 Ways To Add Design Thinking Into Your Project - Tom Hulme

The Pilot Report: 12 Mile Radius

Wed, 27 Oct 2010 08:06:00 -0400

The Pilot Report: 12 Mile Radius:

The Pilot Report is a blog series which details some of the stuff our pilot companies have been working on. This week our post is from the 12 Mile Radius blog. Click here or the tile of this post to visit the 12 Mile Radius website.

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So we’ve been kind of MIA over the past few weeks. This is mainly due to the fact that we’ve really been trying to figure out where we’re going with this company. We’ve decided to take a slight detour down the path of least resistance (that of making a microgame) in order to help us achieve our longterm goal of making a macrogame in order to change the mobile phone gaming industry.

But wait! What are microgames and macrogames?! Who knows? We do. We’ve coined the terms to help us and our customers understand the difference between where the mobile gaming industry is now and where we want it to be after our 2nd game launches. A microgame is a small game that is played for maybe 5-10 minutes, you make a lot of progress in that small amount of time, and you don’t think about the game again for a while, for example, Angry Birds, Plants vs. Zombies, etc. While these are great games, we want to take mobile phone games one step further into the land of macrogames.

Macrogames are big, expansive games that can (and we emphasize the word can) be played for long periods of time. This includes things like Final Fantasy, World of Warcraft, and Kingdom Hearts. This is where we think the mobile phone gaming industry is lacking (or, at least, it’s lacking in good macrogames).

All that aside, the main point of this post is to let you all know we’re back in black and we’re taking off again. We’re going to start off with a microgame in order to generate some revenue so that we can fully accomplish our goal of making a macrogame on a mobile phone.

On a side note, Greg got a haircut.

The Lean Startup has evolved into a movement that is having a...

Sun, 15 Aug 2010 08:37:38 -0400

The Lean Startup has evolved into a movement that is having a significant impact on how companies are built, funded and scaled. As with any new idea, with popularity comes misinterpretation.

Here are the top five myths about The Lean Startup, and the truth behind each misconception:

Myth 1: Lean means cheap. Lean startups try to spend as little money as possible.

The reality is the Lean Startup method is not about cost, it is about speed. Lean startups waste less money, because they use a disciplined approach to testing new products and ideas. Lean, when used in the context of lean startup, refers to a process of building companies and products based on lean manufacturing principles, but applied to innovation. That process involves rapid hypothesis testing, learning about customers, and a disciplined approach to product development.

Myth 2: The Lean Startup methodology is only for Web 2.0, Internet and consumer software companies

Actually, the Lean Startup methodology applies to all companies that face uncertainty about what customers will want. This is true regardless of industry or even scale of company: many established companies depend on their ability to create disruptive innovation. Those general managers are entrepreneurs, too. And they can benefit from increased speed and discipline.

Myth 3: Lean Startups are bootstrapped startups

There’s nothing wrong with raising venture capital. Many lean startups are ambitious and are able to deploy large amounts of capital. What differentiates them is their disciplined approach to determining when to spend money: after the fundamental elements of the business model have been empirically validated. Because lean startups focus on validating their riskiest assumptions first, they sometimes charge money for their product from day one – but not always.

Myth 4: Lean Startups are very small companies

This focus on size also obscures another truth: that many entrepreneurs live inside of much larger organizations. As I’ve written elsewhere, I believe the proper definition of a startup is: a human institution creating a new product or service under conditions of extreme uncertainty. In other words, any organization striving to create disruptive innovation is a startup, whether they know it or not. Established companies have as much to gain from lean startup techniques as the mythical “two guys in a garage” (and, as I’ve witnessed in my consulting practice, sometimes even more).

Myth 5: Lean Startups replace vision with data or customer feedback

Truth: Lean startups are driven by a compelling vision, and they are rigorous about testing each element of this vision against reality. They use customer development, split-testing, and in-depth analytics as vehicles for learning about how to make their vision successful. Along the way, they pivot away from the elements of the vision that are delusional and double down on the elements that show promise.

The old model of entrepreneurship was dominated by an over-emphasis on the magical powers of startup founders. Usually, the stories we hear about successful startups describe a brilliant visionary, fighting valiantly against the odds to create a new reality. As employees gradually fall under his or her spell, they execute his or her master plan, which leads, in the end, to world domination.

Anyone who has spent time around real startup successes knows this story is usually wildly untrue. Founders benefit from historical revisionism and survivor’s bias: we rarely hear the stories of the thousands of visionaries who failed utterly.

The Lean Startup moves our industry past this mythological entrepreneurship story and towards a methodology that is more scientifically grounded and accessible.

People who are truly committed to a vision of changing the world in a significant way can’t afford the luxury of staying in that cozy, comfortable place of building in stealth mode without outside feedback. If you really believe your vision needs to become a reality, you owe it to yourself to test that vision with every tool available.

Via Reuters.com

Investors Look to Fund Capital-Lite Businesses

Sun, 15 Aug 2010 08:33:52 -0400

More and more, entrepreneurs are turning to the web to start new businesses because of low startup costs—often less than $1 million. Investors are helping drive the trend, in part because they have less money to invest. The average venture fund has shrunk from $166 million in 2007 to just over $120 million at the end of last year, according to data from the National Venture Capital Association and SVB Capital. Smaller funds tend to gravitate toward smaller funding rounds.

Why:

Cheap Customer Acquisition
A Cheap and Clear Growth Strategy
A Clear Differentiator

These factors create an overall Better Bottom Line:

n the end, Andelman says VCs are pursuing more capital-light investments because businesses are being acquired for less now than a few years ago. “$50 million exits are not unusual these days, whereas $500 million exits are almost unheard of,” he says.

That’s a problem for venture capitalists who live off bets that return 10 times or more their initial investments. Why? The math doesn’t work when you’re writing big checks. Only the investor that bets $5 million (or less) in exchange for a 40 percent stake gets a 10x return on a $50 million buyout.

By focusing on lean web-based businesses, Andelman says he’s put his fund in a position to earn big profits on small exits. “What we found is that anyone can write a business plan that looks capital-efficient. The odds that it actually will be capital-efficient are much higher in the web domain,” he says.

In one instance, Rincon would earn 10 times its money on a portfolio company sold for less than $25 million. Entrepreneurs can benefit from this same dynamic. Capital-light businesses are more likely to be bought, Andelman says.

“I don’t think anyone gets into this business targeting $50 million exits,” he says. “But it’s nice to know that if the businesses in which we invest ended up there, it would still be considered a great outcome for everyone.”

Via Entrepreneur.com

Study: Start-ups Create Lasting Job Growth

Sat, 14 Aug 2010 08:04:00 -0400

Though only a fifth of start-ups survive long-term, they replenish the employment market, Kauffman’s Robert Litan reports.

Most of the jobs start-ups create remain as the fledgling companies age, creating a lasting effect on the economy, says a new study.

The Ewing Marion Kauffman Foundation study – titled “After Inception: How Enduring is Job Creation by Start-ups?” – found that although only a fifth of start-ups make it to their 25th birthday, employment figures stayed at 68 percent of the initial number. It suggests the number of start-ups that flourish and create jobs balances the jobs lost by companies that close.

The study is based on Business Dynamics Statistics, which is compiled by the U.S. Census Bureau and tracks the number of new businesses from 1977 to 2005. The organization defines start-ups as businesses that are less than one year old.

Although start-ups’ employment after five years is 80 percent of what it was when the companies began, many of those jobs remain long term. The study found that in the year 2000, start-ups created almost 3.1 million jobs. Only half of those firms survived to 2005, but the surviving firms maintained 78 percent, or more than 2.4 million, of the jobs that existed in 2000.

The study also analyzed entrepreneurship and employment during recessions. Companies starting up during recessions at first hired fewer employees than those started up at other times, but generally increased their hiring post-recession to catch up. But companies born during extended recessions – those lasting three years or more – created about 10 percent fewer jobs than companies that avoided a recession in their first five years. That’s about .2 percent of all jobs in the economy. (To hear the Kauffman Foundation’s take on why great companies tend to start during a recession, read this article.)

“While a recession has a negative effect on a company’s employment in its first few years, a recession does not impose lasting consequences on startups,” said Robert Litan, the study co-author, an Inc. contributing editor, and the foundation’s vice president of research and policy, in a statement.

(Article via Inc.com)

This is why building lean is important! Great lesson for both...

Wed, 14 Jul 2010 10:01:00 -0400

This is why building lean is important! Great lesson for both developers and consumers. Do what is necessary. Reducing waste can also be interrupted as reducing choice.

"…isn’t there more to life (and design) than comfort, efficiency, speed, and safety? Why do..."

Wed, 07 Jul 2010 22:01:08 -0400

“…isn’t there more to life (and design) than comfort, efficiency, speed, and safety? Why do Scandinavians jump naked into holes cut in frozen lakes in the middle of the winter? Why do people enjoy riding roller coasters, throwing rice at the Rocky Horror Picture Show, or beating video games? People are looking for value from products, software, and experiences and value is more than just function, ease of use, and price. Value is measured on other scales like entertainment, reward, or self-identity. For designers to succeed, we have to make things work on many complex and contradictory levels. At the end of the day, a successful project has to provide connections that people consider “valuable” and “meaningful.””

- Tucker Viemeister: Psychonomics (a name for the psychological relationships between the human mind and the stuff designers make)

For those of you thinking whether or not a program like...

Wed, 16 Jun 2010 18:26:00 -0400

For those of you thinking whether or not a program like BetaFish is really worth your time, watch the video and read the excerpt from the a story about how the Pulse News Reader got its start!!

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STANFORD, CA—Here on campus, a couple of undergrads successfully built their own Y Combinator. It launches today.

It’s called SSE Labs and it is modeled after the incubator Y Combinator, except it take zero equity. One company in its portfolio is already making waves, Alphonso Labs. Alphonso created the Pulse News Reader app for the iPad, which is the top paid iPad app in iTunes right now. Aksahy Kothari and Ankit Gupta are founders.

The inaugural startups are:

Alphonso Labs—iPad news reader, with plans to expand to the iPhone and Android.
Think Bulbs—Builds mobiile photo discovery apps for the iPhone
FountainHop—Building an event mapping platform that intelligently and intuitively gives users access to geo-temporal data relating to their physical surroundings.
Naquatic—iPhone and iPod Touch game developer creating large scale, online, social games starting with world conquest games.
Black Swan Solar—Goal is to make solar energy cheaper than coal.
InvestAway—A platform for delivering personalized, professional advice to individual investors.
MyLinkPower—Help professionals get jobs through their social networks.
Motion Math—Create educational games that kids love and parents trust. Inspire kids to learn by creating intuitive understanding through mobile game play.
Loki—Location-aware mobile gaming.

click HERE to read the entire story

June 1, 2007 lecture by Bill Buxton for the Stanford University...

Wed, 09 Jun 2010 15:25:00 -0400

June 1, 2007 lecture by Bill Buxton for the Stanford University Human-Computer Interaction Seminar. In this talk, Bill discusses the experience design process, from the perspective of methods, organization, and composition.

This is such a #classic lesson from an unlikely...

Sat, 05 Jun 2010 13:07:00 -0400

This is such a #classic lesson from an unlikely source:

Spongebob: how did the people in that magazine get all that money?

Squidward: they’re entrepreneurs, they sell things to people.

Spongbob: what kind of things?

Squidward: how should I know? things people want to buy.

Business and design theory 101 wrapped up into a few lines of dialogue. A lot of seasoned entrepreneurs have no idea how profound the message of this video actual is.

The downturn - A perfect time to innovate

Fri, 04 Jun 2010 15:15:04 -0400

The downturn - A perfect time to innovate:

thecoinloft:

…….you’ve got to start with Ernest Rutherford: Kiwi lore tells us that when native son Rutherford, known today as the father of nuclear physics, split the atom in 1917, an American journalist asked him how he — someone from a South Pacific backwater — did what so many European and American thinkers could not. He famously replied, “We didn’t have the money, so we had to think.”

The coIN Loft (.com): Coin 2.0: Provocations with Humility

Wed, 02 Jun 2010 21:15:00 -0400

The coIN Loft (.com): Coin 2.0: Provocations with Humility:

The overall mission of The coIN Loft is state wide revitalization through startups — any type will work. It doesn’t matter if you have an idea to keep the parks clean, save energy, make fresh produce more accessible to lower income parts of the city, help government better communicate with residents, or to build the next generation of cell phones. If you have an idea that will take Delaware to the next level, please….come here. We want to know who you are. We want to know how we can help you. Our latest project, BetaFish, is our most recent step toward that end. (click here to learn more about BetaFish) In the future, BetaFish will be a way for people with great ideas to get the money they need to get their projects off the ground. It’s obvious that we’re not focused on that broader picture yet, but with your help, we certainly can be.

Are we crazy for believing Delaware is capable of the type of change we’re asking for? Are we alone in our belief of “WE THE PEOPLE?” What do you think?

Lean Startups-What are they and do they work?

Tue, 01 Jun 2010 11:09:56 -0400

Lean Startups-What are they and do they work?

How Does BetaFish Works?

Mon, 24 May 2010 16:19:00 -0400

BetaFish is a 90-day startup accelerator program designed to help college students develop and launch web-based technologies. Our initial class will be available to 5 student teams. We plan to accept 10 applications at some point during Fall semester. The plan as of right now is to offer BetaFish during the Fall and Spring semesters. The 10 applicants will be split up between the two semesters. As long as the ideas we receive have market viability, it is will be first come, first serve.

We’ve chosen to focus on web-based startups for three main reasons : (1) they can be conservatively capitalized, (2) they can be developed faster and more agile using free (or close to free), open-source software, and (3) can achieve viral scalability. We are well aware that in today’s economic climate, 90% of startups fail; however, our research shows that the main reasons for failure is because that startups don’t always fully understand the problem their solving or don’t have a firm understanding on how to appeal to their target customers, both of which exponentially increase burn rate.

To succeed as a startup, one must rapidly iterate and test ways to effectively balance the creation of solutions (products or product modifications) and customer development without compromising the longevity of resources. For this reason, our program will thoroughly guide each team through product and customer development to ensure a marketable/fundable product or service is actually achieved. Our teams will consist of 2-3 individuals capable of building the web application or tool themselves without investment in additional developmental resources.

The program will conclude with a presentation day for each startup to demo their product or service to later-stage investors in an Ignite-style presentation format. Success of this program will be judged by the number of startups that either achieve market traction or receive follow-on investment. Market traction is considered at least one customer willing invest their time in testing the product because of an interest in purchasing it at its completion or a customer willing to pay for the product prior to it’s completion.

As we’ve noted, we’ll be focusing on web-based startups. Web-based as defined by us for the purposes of this program will be tools and applications capable of operating primarily from a standard web or mobile browser.

Each startup will be provided with the following:

- Dedicated workspace (i.e. The coIN Loft)
- Accounting services (i.e. bookkeeping)
- Legal services (i.e. incorporation, partnership agreements, term sheets, etc.)
- Product development mentors
- Customer development mentors (i.e. marketing, branding and sales)
- Investor pitch coaching
- Introductions to later-stage investors
- Graphic design and Web development assistance.

90-Day Schedule:

Activities between day’s 0-7 will need to be completed before teams are permitted to begin building their product or courting potential customers.

Days 0 - 5: Development Plan

- - Project Summary
  - Team Member Responsibilities
  - Gantt Chart
  - Critical Path & Risk Analysis
  - Business Requirements
  - Technical Requirements
  - Implementation Requirements
  - Change Management Plan

Days 5 - 7: Target Customer Analysis

- - Who is the customer
  - Customer Segmentation (by revenue potential)
  - How will they be reached
  - When will they be reached
  - Competitive Analysis
  - Who is the consumer buying from
  - Where does the venture fit into the market
  - Risks

Days 7 - 15: Product & Customer Development, Company Formation, Establish Accounting

Day 15: Progress Presentation

Progress presentations will be made every 15 days. These presentations will be primarily used as capacity building activities, as well as an opportunity for each team to gain insights and feedback from mentors about the progress of their project. These presentation will also have an educational component which will involve guest-speakers from the local business community.

Days 15 - 85: Product/Customer Development

Day 30: Progress Presentation

Day 45: Progress Presentation

Day 60: Progress Presentation

Day 75: Progress Presentation

Days 85 - 89: Investor Pitch/Product Demo Development

Day 90: Investor Pitch & Product Demo Day

Day 90: Closing Event

Video

Mon, 24 May 2010 12:05:10 -0400

Photo

Mon, 24 May 2010 11:45:38 -0400

What is BetaFish?

Mon, 24 May 2010 11:18:00 -0400

By a raise of hands, how many people have ever been paid to develop a good idea? Kudo’s to those of you that have, but if you’ve not been given that special privilege and you have an idea worth money, BetaFish is here.

If you’ve ever wasted 3 months crafting an iron clad business plan, only to be smacked with the reality that no one cares about what you’re trying to sell them. BetaFish is here.

BetaFish is an incubator on steroids. We’re combining the benefits of a Coworking space (community, collaboration, openness) with lean startup methodology, to connect smart and talented people to investment opportunities faster than ever before in Delaware.

The idea is to find five, 2 person teams with a super cool tech idea; pay their living expenses for 90 days; give them space at coIN to build their “widget” and collaborate; and also provide the opportunity to pitch to accredited Angels and V.C’s when completed.

Organizations like Y-Combinator in California, DreamIT Ventures in Philly, and Techstars in Boston, are killing it right now. Coworking spaces like Gangplank, IndyHall, and The Factory, all have an steroidal incubator too.

I’d like to assume you already know what Coworking is, so I’ll briefly explain what lean startup methodology is all about.

Eric Ries is the grandfather of the term lean startup. He’s a 31 year old engineer, entrepreneur and blogger. The principles of the methodology are based on the lean manufacturing process, which was made famous by Japanese factories decades ago. The thought behind the methodology is to reduce waste, increase manufacturing efficiency, communicate with consumers to better understand their needs, and thus provide better value in a shorter period of time. BetaFish is no different. We’re all about building more and BS’ing less.

The Lean Startup process makes entrepreneurs focus 100% of their efforts on completing tasks that are absolutely vital to the progression of the idea. Traditional incubators teach startups how to write business plans, when in actuality, startups don’t need a business plan…they need a scalable, and repeatable business model. They need to focus all of their time on product and customer development. They need to rapidly test, fail, learn, and build new ways to generate money from day one so they can afford to perfect their products as customers give feedback.

There are 3 stages to the Lean Startup process:

Customer Discovery: Ideation (You’ve found a problem. How do you solve it?)

Customer Validation: Who will Pay? (You’ve started building a solution, but who will actually buy it? Why?)

Customer Creation: Growth (Products a hit. People love it. How do you sell more without going broke?)

Our 90 day program will lead participants down a straight and narrow path from idea-to-marketplace. We’re providing them with every resource they’ll need to formalize their idea, incorporate, set up their books, solidify their marketing plans, acquire early adopter consumers, build a scalable product, and connect with investors willing to invest. The only requirement we ask of our participants is that they are fully committed to nothing else, but building their product and perfecting their business models, as well as, working at coIN 3 days per week between Monday and Friday.

When all goes well, we’ll be kicking out 2-3 funded companies every 90 days! Delaware will truly never be the same!

Stay tuned for more information.

Hello World!

Mon, 10 May 2010 11:36:15 -0400

BetaFish is a startup accelerator that is being hosted by The coIN Loft (a Coworking space). We’ll be launching this revolutionary venture on the second floor of The coIN Loft space in Wilmington, Delaware.

The program is a 90 day lean development program for up to 5 web based tech startups. We’re offering the lucky individuals that are invited to participate pre-venture capital to build their world changing products/services; access to vital resources; and a chance to collaborate with the brightest brains Delaware has to offer.

We are very proud to be a part of this game-changing project, and look forward to all the opportunities it will bring.

Stay tuned for updates!